Don’t make mutual fund investment prior going through this article

by: Nipaphan Poonsatiansup CFP® Freelance financial planner, writer and lecturer

At present mutual fund investment is one of the interesting choices since there is available service from experience managers to provide multiple choices with spreading-alternative risks and less capital by at least four digits.  Certain mutual funds offer tax privileges. Moreover, mutual funds are under supervision of the Security and Exchange Commission of Thailand (SET), the state agency to enhance fund company over seeing and ethical practices as a mean to protect investors. 

Prior to investment in mutual fund you should firstly acquire insights from “Fund Fact Sheet” published by each asset’s management company.  

The Fund Fact Sheet handbook provides investment policy with possible return, various risks and conditions as a leading guide prior to decision making whereas the complete handbook is provided directly by relevant fund selling agents or download from the specific assets company website. 

The following principles are available in the Fund Fact Sheet to clarify certain fact for all investors. 

1. What you are going to invest for? This is to enhance proper insights for investors about the nature and category of certain funds, including management strategies to facilitate investment consideration. 

2. For whom this fund is matching? The information will specify whether this fund is “matching” or “not matching” for whom as a basis for decision making by investors.  

3. What you should be specifically watch over? This information will specify risk scales from 1 to 8 so that investors would be aware of certain risky conditions for furthering recognize the responding risk scale i.e. at 5, if it is over 5 certain investors might be no longer interested to invest in such funds.

4. Ratio of investment assets  provide instrument’s details for which certain mutual funds have invested percentagewise.  In the case of stocks, apart from specification, the first 5 of them shall be identified.

5. Fees provide information about fund management cost so that we can calculate what would be the expected return from mutual fund investment and other instruments of the same category belonging to other assets companies to identify fees differentiation. There are 2 types of fees and expenditure for mutual fund investment as the following: 

  • Fees and expenditure directly collected from investors:  such fees include front-end-fee which has been added to the share value and the back-end-fee which has been deducted from the share selling return. 

  • Total expense ratio based on indirect expenditure being jointly responsible by the investor i.e. management fee, trustee fee, broker fee, registrar fee, auditor fee, advertising and Fund Fact Sheet publishing expenses etc. 

6. Performance outcome indicates the past performing results of the mutual fund to show all returns for the past 3 and 6 months, 1 and 3 years and from the start up.  In order to find a better performing mutual fund comparison must base on the same period of time and investment policy.  Such information is abailable in Fund Fact Sheet.  However, the past performing outcome is not reliable for future expectation. 

7. Other information for acknowledgement include the dividend payment policy, buying-selling investment unit lists, name lists of fund management team and information for contact and inquiry etc. 

Going through Fund Fact Sheet is not that complicated, hoping that more investors will pay attention to read it prior to any investment decision to enhance their highest advantage. More importantly is that investors should acquire better insights by asking for more required advise from the broker.